For consumer products, the power of mobile distribution is hard to overstate. Facebook serves more than 1B mobile users each month. Angry Birds reached 50M users in 35 days, a feat that took Instagram 18 months and Facebook more than 3 years. But the distribution advantages of mobile app stores hasn't been observed as powerfully in SaaS or enterprise software.
Through last week, 80% of fast-growing technology companies who reported Q2 earnings had met or exceeded expectations, on average by 4%. As the earnings season has progressed, the tech sector is showing impressive signs of strength and predictability in the underlying companies' business. Startups benefit from a booming public market for three reasons.
I've listened to thousands of fundraising pitches in my six years so far at Redpoint. Some with demos, some without. Some with hockey-stick charts, and others just an idea. I'll never forget one meeting when the founders presented an entirely hand-drawn deck on 12 pieces of paper. The extent of founders' creativity is hard to over-state. Most founders do cover the essentials of a pitch in their presentations. But what distinguishes the best pitches? It's a question I hear all the time from founders looking to polish their pitch.
Customer Success is a relatively new discipline in the Software-as-a-Service world. Consequently, there are many unanswered questions about how best to build and manage great Customer Success teams for SaaS companies. Because the financial impact of a great CS team is compounded monthly and can meaningfully increase the growth and decrease the cash needs of SaaS startups, it's critical for CS leaders to get it right. Last night, I attended a dinner with many heads of Customer Success from prominent valley SaaS companies. We spoke for quite a while about the best way to structure and motivate Customer Success teams to balance customer care and account growth. One VP of Customer Success described an innovative approach to managing this balancing act.
One of the most important changes is the workplace in the last 20 years is the notion that most employees are free agents. We are hired and fired and resign at will. It's a markedly different era than the career salarymen of IBM's heyday who remained with the company for decades from college graduation through retirement. In this highly-competitive talent market, where every employee is a free agent, hiring and retaining talent has become a key strategic advantage.So, which are the best tools to create a vibrant and attractive working environment?
I've never paid much attention to earnings reports in the past. But as I've been analyzing the tech industry more and more, and the stock market has begun to surpass record highs, I've been wondering whether the persistent bull market in tech is sustainable. Or at the very least, whether the companies pushing the industry forward are able to understand the environment and their businesses well enough to meet the commitments they make to public market investors.
"Advice is one person's experience generalized", an entrepreneur told me once. "It's a single point of view with all kinds of survivorship and attribution bias. Advice can be a terribly dangerous thing, because it can be used as a shortcut for thinking." When I asked how he responded to requests for advice, because as a successful entrepreneur he was often solicited for it, he replied that he first shared the structure and the framework he used to look at the problem. Only after discussing that did he reveal the details about he and his team had arrived at a decision.
How much is my business worth? It's a question every entrepreneur, founder and business owner asks themselves. This is particularly true during acquisition conversations with a prospective buyer. Because most companies are privately held, the acquisition details of the roughly 10,000 businesses who sell themselves for less than $500M each year in the US remain hidden. There are enormous forces at play in the M&A market that indicate M&A activity will increase substantially in the next few years. Consequently, every business leader ought to develop and maintain a good understanding of their business' market value.
Through the first six months of 2014, VCs have raised about as much as all of 2013. If this pace of fund raising continues, 2014 would mark the biggest year for VCs since 2001, when the industry raised about $38B. This new money hasn't yet hit the startup fundraising market in earnest, as the chart above shows. The second quarter of 2014 is the sixteenth largest by capital deployed sinced 1995, making it a top quartile quarter, but to break into the top five, that figure would need to triple. Nevertheless, we will see a spike in the next six months as firms begin investing from new funds. Which startup sectors should expect to benefit from this surfeit of capital?
In 2008, when I started working at Redpoint I knew very little about how the venture business worked, and before I started at the firm, I wanted to prepare by learning as much as I could about the industry. Unfortunately, not much was written about VC at the time. In fact, I found only two books: a textbook on private equity and venture capital by HBS professor Joshua Lerner, and an out-of-print collection of 32 VC interviews called "Done Deals," published in September 2000. I bought a second-hand copy on Amazon and read it cover to cover.